“Exxon is a Cash Machine, and They Could Be Using That Cash to …”

Michael Giberson

An excellent look at ExxonMobil in the Sunday New York Times. The article makes a strong case for the view that ExxonMobil is one of the best run large international corporations in the world.

The article observes that the company has reacted to recent record profits by, among other things, increasing dividends and engaging in stock buy-backs. Some company critics argue that the company should be keeping more of this cash and investing in alternative fuels or other clean energy projects. For instance:

“Exxon is a cash machine, and they could be using that cash to invest in clean technologies that would expand their base,” said Andy Stevenson, an energy analyst at the Natural Resources Defense Council. “Right now, they have no growth story. They are trapped in oil and gas.”

Stevenson must share in the high opinion of Exxon’s management, else why would he want the company investing billions in clean energy research? In effect Stevenson is saying that he wants Exxon to develop intellectual property in clean energy, and he trusts the company to put that knowledge to good use once acquired.

Now I don’t know anything about Stevenson, nor have I been following the relationship between the Natural Resources Defense Council and ExxonMobil. Instead, I just sort of assume that the relationship is one of mutual suspicion and maybe outright hostility. So Stevenson’s apparent trust in the company suggests a changing outlook.

If one was an environmentalist who was suspicious of oil giants, the preferred approach would probably be that the old oil company liquidate itself and allow its investors to choose how and where to invest in clean energy directly.

Which is exactly the approach Exxon is slowly taking.